Ask Question
22 September, 14:55

Jimmy has $255,906 accumulated in a 401k plan. the fund is earning a low, but safe, 3% per year. the withdrawals will take place at the end of each year starting a year from now. how soon will the fund be exhausted if jimmy withdraws $30,000 each year?

+4
Answers (1)
  1. 22 September, 16:27
    0
    In this problem, we have to calculate the number of years it takes to fully exhaust the fund if Jimmy withdraws 30,000 per year

    This can be calculated using NPER function in excel as in = NPER (rate, pmt, pv) where

    RATE = annual interest rate = 3% = 0.03

    PMT = annual withdrawal amount = 30000

    PV = Present value of accumulated savings = 255906

    Number of years = NPER (0.03,-30000,255906) = 9.9999 years = 10 years

    (Note the PMT is input with a negative sign since it is a withdrawal and is a cash outflow)

    Number of years it takes to completely exhaust the fund = 10 years
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Jimmy has $255,906 accumulated in a 401k plan. the fund is earning a low, but safe, 3% per year. the withdrawals will take place at the end ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers